Capital Bank Corp. has announced plans to raise as much as $116.6 million through a public offering of common stock.
The Raleigh, N.C.-based company owns Capital Bank, which got $41.3 million in taxpayer money through the Troubled Asset Relief Program in December 2008.
The company made no mention in its registration statement of any plan to repurchase the TARP shares and warrants that the subsidiary issued to the Treasury Department in return for the aid.
According to its Securities and Exchange Commission filing, Capital Bank Corp. intends to use the proceeds from the share sale "for general corporate purposes, including to strengthen the capital of the Bank and to support our strategic growth opportunities in the future."
It said management intends to exercise "broad discretion" in the use of any new capital raised through the offering, which would nearly quadruple its number of shares outstanding.
Capital Bank Corp. said last week that it lost $14.2 million in the second quarter on top of a $5.92 million loss in the first quarter and a $9.17 million loss for 2009.
The company saw its nonperforming loans rise from $58.2 million to $74.8 million in the second quarter alone. Total nonperforming assets went from $73.8 million to almost $100 million in the same period.
According to the company's registration statement, 83 percent of its loan portfolio at March 31 "had real estate as a primary or secondary component of collateral."
Capital Bank has paid almost $3 million in TARP dividends to the government, all of them on schedule. But it has yet to redeem any of the preferred stock or warrants it issued to the Treasury.
Given the deterioration of its finances, it is unlikely that Capital Bank would receive regulatory permission to redeem any or all of its TARP shares, even if it were leaning in that direction.
News of the stock offering spooked investors. The company's shares fell more than 30 percent on Friday after it announced its earnings and plans to sell shares.
The offering of 34.5 million common shares will be underwritten by FIG Partners, LLC as sole book-runner and lead manager. The maximum offering price per share was set at $3.38.
The company's stock closed Wednesday at $2.36 a share.